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At some point, every leader will face the question: What happens when I’m ready to step away? Whether you’re planning to sell, pass it on to a successor, or simply close up shop, you NEED a well-thought-out exit strategy. Unfortunately, many businesses fail to prepare, leading to unnecessary stress, missed opportunities, or worse—diminished value when it’s time to leave.
This post will break down the common pitfalls in exit planning and offer actionable steps to ensure your business (or role) thrives beyond your involvement.
Exit Strategy as a Micro Business Owner
For many solopreneurs or small business owners, the idea of shutting down seems simple. You open up shop, work for a few years, and when it’s time to move on, you close. But even this requires planning to avoid missed opportunities and loose ends.
Here are some items you’ll need to manage before closing your business:
- Legal Compliance: Ensure you’ve fulfilled any contracts, leases, or agreements you’ve entered into. Closing a business doesn’t mean ignoring your legal responsibilities.
- Finances: Pay off any debts, outstanding taxes, and compensate any freelancers or vendors you’ve worked with. Don’t leave financial obligations unresolved.
- Documentation: As you prepare to close, documentation becomes your best friend. From turning off software subscriptions to understanding how to finalize client projects, well-kept records smooth out the process.
But before you walk away, remember that your business is more than just a service or product—it’s made up of valuable assets. As Akilah Thompkins-Robinson, Founder of SEO Assist & Girl Get Visible, said, “All of the assets you’re building—your website, social pages, email list, client list, trademarks, copyrights—are all sellable assets and even more valuable when bundled together.“
Instead of closing outright, also consider selling your business assets through platforms like Empire Flippers or BizBuySell. When you build with your succession in mind, your exit could be more lucrative than you imagine.
Why Most Exit Strategies Fail & How to Avoid It
You’ve spent years building your business, but did you know that only about 20-30% of businesses sell when they hit the market? This bleak reality shocks many owners who assume their business is a hot commodity. If you’re aiming to sell, here are two key reasons why businesses fail to sell:
- You’ve Built a Job, Not a Business
Buyers want to purchase a well-oiled machine, not take on another job. If your business relies heavily on your daily involvement, it’s less appealing to potential buyers. Systems and processes that operate without your constant oversight are crucial to selling a business. - Unrealistic Valuation
Many owners overestimate the value of their business. While it’s understandable to feel attached, it’s important to price your business based on market value, not personal attachment.
So how do you avoid these traps? The answer lies in focusing on Organizational Design. This involves setting up systems, roles, and processes that function independently of you. Successful businesses build from the outside in, ensuring they’re scalable and capable of running without the owner’s direct involvement.
Make it a priority to invest in operations, systems, and succession planning early on, not just when you’re ready to sell. Buyers want a business that has longevity, not one that collapses when the owner leaves.
For a deeper dive into what this looks like and how to build out the processes, you will enjoy the Scalable Processes Digital Product found at the Digital store.
The Transitional Phase with Succession Planning
While this advice may seem directed at business owners, it’s relevant for anyone in leadership positions. When it’s time to step down or move on from a role, especially in a leadership capacity, succession planning is necessary.
Many leaders make the mistake of choosing successors based on tenure or familiarity, but a good fit for leadership goes beyond those factors. The next step requires you to assess the skills needed for the role and guarantee a smooth handoff.
Here are some tips to ensure you hand off your role to the right person:
- Create a Roadmap: Organizational Design & Development helps map out the roles and people needed to keep the business running after you leave. Identify who’s ready to step up and what skills they need.
- Assess Skills: Identify the skills required for your role and evaluate potential successors based on their ability to lead and grow in that position.
- Plan for Longevity: Is your position designed for long-term success? Ensure that the role isn’t a dead-end position and think about ways your successor can evolve and improve upon your work.
Succession planning isn’t a one-time activity. It’s something that requires continuous effort, evaluation, and refinement. By actively planning for your exit and training your successor, you can ensure that the business or role thrives long after you’ve moved on.
For a headstart, make sure to grab the free succession planning template from the Resource section of the website.
Steps to Build a Strong Exit Strategy
To avoid becoming part of the 70-80% of businesses that don’t sell or handing over your role to the wrong person, here are some actionable steps you can take today:
- Evaluate Your Business Assets: Make a list of everything you own—physical, digital, and intellectual. This includes trademarks, websites, and client lists. Determine what can be sold or handed off.
- Invest in Processes Early: Start designing systems that allow your business to run smoothly without you. Think about automation, team workflows, and repeatable processes.
- Develop a Succession Plan: Create a roadmap for your exit. Who will take over your role? What training will they need? How will you ensure they’re prepared to succeed?
- Regularly Update Your Plan: Your exit strategy shouldn’t be static. As your business grows, your plans should evolve. Revisit your succession plan and exit strategy annually.
If you need support with the above, look to see which services would best align with your vision, and let’s set up a call!
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